The future of Health Care is here

How technology will help us lower the cost of care and increase population health.

Yesterday saw the launch of Doctor on Demand, a new service backed by the likes of Dr. Phil and led by SF Tech Entrepreneur Adam Jackson and former Stanford Physician and current White House fellow Dr. Pat Basu. The service aims to replace certain types of face-to-face office visits with a video assessment from a licensed physician, though it’s currently limited to the 15 states which allow such services.

Doctor on Demand is geared towards the types of ailments for which a telemedicine visit makes sense. Essentially, Doctor on Demand operates much in the same way as an Urgent Care, but eliminates the need for patients to physically visit an Urgent Care center. For example, Doctor on Demand can provide medical advice and prescribe medications for common illnesses such as influenza, respiratory and urinary tract infections, and skin irritations and rashes, but will refer you to a clinic or emergency room if your needs would be better met in those settings.

The service is certainly not the first to tackle telemedicine as a service. There are several online forums such as HealthTap where patients can seek medical advice from licensed physicians for a modest fee, and services like HealthPartners’ VirtuWell where Physicians are on hand to review patients’ symptoms and provide medical advice and medications without an office visit.

But Doctor on Demand is among the first to provide direct doctor-patient interaction by way of video chat. With web forums, phone visits, and other non-video telemedicine options, the physician’s ability to assess a patient is limited to whatever the patient self-reports as symptoms. Conducting a video visit allows physicians to more fully evaluate a patient almost as if they were right there in the office. This in theory can lead to better outcomes for patients, and could prevent further visits by more accurate diagnoses.

Telemedicine is being widely touted as one way to drive down the costs of the most expensive health care system in the world. The average American pays roughly $8,233 per year for health care coverage, according to a 2012 Organization for Economic Co-operation and Development report, and the costs are increasing 3 to 10% per year. Without the overhead and staffing levels associated with bricks and mortar clinics, telemedicine clinics can provide a comparable (or perhaps even a better) service as traditional clinics at a significantly lesser cost.

For example, the typical primary care or urgent care clinic visit costs between $100 and $150, paid by either the insurance company or out of pocket expenses. These fees include costs for nurses, registration staff, management, physicians, exam equipment, and many other things. And the cost jumps significantly when a patient goes directly to the Emergency Room.

With telemedicine, the overhead is much less, and so are the fees you’ll pay for a provider visit. Most telemedicine visits cost between $30 and $50, with most services, including Doctor on Demand, charging around $40. When you account for the tens of millions of Urgent Care and Emergency Room visits that could have been handled via telemedicine, the savings potential is truly astronomical.

The American Academy of Urgent Care Medicine estimates there are 110 million Emergency Room visits annually, and that 14-27% of these can be managed by an Urgent Care. If we assume 20% of all ER cases can be handled by an Urgent Care, and that 75% of those cases could be managed by telemedicine, there are 16.5 million potential annual telemedicine visits that are currently Emergency Room visits.

At a savings vs. Urgent Care of $85 per visit ($125 less $40), the potential telemedicine savings for just ER visits is around $1.4 billion dollars per year. Once you account for all Urgent Care visits, the savings is likely in the neighborhood of $5 to $10 billion on an annual basis. Clearly telemedicine presents an important vehicle through which we can finally begin to reduce our health care expenses.

The world of telemedicine, and the impact telemedicine has on our health care delivery system, is evolving. Technological advances allow patients and providers to interact in new ways, and more and more patients are beginning to utilize telemedicine as a way to suppliment and, at times, replace the traditional means by which they receive care. If implemented the right way, telemedicine will go a long way to reduce the cost of a health care system that’s currently crippling our economy, and could bolster our health outcomes.